The Governor made some modest cuts and spending increases to the existing budget, saying he especially wants to focus on education and transportation during the upcoming General Assembly session. But not everyone agrees with those plans.

The revisions give teachers a conditional, 2 percent pay raise and cut Northern Virginia's cost-of-competing funds for non-instructional staff. McDonnell used agency savings and re-prioritized other funds to make the changes.

"Overall, mental health, Medicaid, K-12, higher ed, transportation are all receiving increases," McDonnell said. The Governor also called for phasing in a small portion of the sales tax for transportation and said he'll unveil more funding plans soon.

State Education Association President Meg Gruber was opposed.

"We're really concerned about any diversion of the General Fund, which includes public education," she said, referring to the plan to divert some sales tax revenues to transportation.

McDonnell said he could not propose expanding Medicaid under the federal healthcare law since it’s already one-fifth of the state budget.

"What can we afford going forward? And do we trust the federal government to really provide 100 percent of the funding for three years and 90 percent forever? They're broke," McDonnell said.

State Senator Janet Howell (D) disagreed.

"There are 305,000 Virginians who would be deprived of it if we don’t accept," she said. The Governor also wants to stop local repayments to the state and add to the Rainy Day Fund.

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